CAPITAL IDEAS FETCH HIGH RETURNS - DOCUMENT

The scheme will now be more flexible and allow import of capital goods for pre-production and post production facilities also. Export obligation will be rationalized by linking it to duty saved. The export obligation would now be 8 times the duty saved. All other conditions will remain unchanged. In order to facilitate upgradation of existing plant and machinery, import of spares will be allowed under the scheme subject to the same conditions. Consequently, the condition of allowing only 20 per cent of spares along with the import of capital goods becomes redundant.In order to facilitate higher value addition in exports, the existing condition of increase in export obligation by 50 per cent in case of export of a product higher up in the value chain is being done away with.

In order to give flexibility in fulfilment of export obligation, a manufacturer exporter would now be permitted flexibility to fulfil his obligation through any other product being manufactured by him. This is being done to allow for changing conditions in the international market in which the export of a particular product may not be remunerative or feasible at a particular point of time. This facility will be subject to the condition that average export of the substitute product will be taken into account in fixing the revised export obligation. The facility will be confined to the products being manufactured by the same company/ legal person.

In line with the general policy, capital goods upto 10 years old will be allowed under this scheme. To facilitate diversification into software sector, existing manufacturer-exporters will be allowed to fulfil export obligation arising out of import of capital goods under export promotion of capital goods scheme for setting up of software units through export of manufactured goods of the same company.

Export of electronic hardware is going to be one of our major thrusts. In order to give a boost to the export of electronic hardware, we are modifying the export hardware technology park scheme to allow counting of all 217 ITA-I items by EHTP units to domestic tariff area units for fulfilment of their export obligation.

Similarly, in the software sector, procedure and formalities applicable to status holders amongst straight through processing units will be greatly simplified. This should facilitate free movement of laptop, computer and other professional equipments and provide required flexibility to the software professionals.

To promote the growth of software exports in the area of embedded programmes, procedure for the import and re-export of the hardware including automobiles in which such programmes are embedded for testing and development will be greatly simplified in consultation with ministry of finance. Henceforth such hardware for embedding upto the value of US $10,000 will be allowed to be imported duty free and permitted to be disposed of after testing subject to certification by software technology parks of India.

In order to allow both hardware and software sectors to remain up-to-date in sectors with high rate of obsolescence, accelerated rate of depreciation will be allowed in conformity with accepted international practice. Similarly, procedural formalities governing donation and destruction of obsolete hardware and inventory will be simplified.